New Delhi, Feb 29 (IANS) Union Finance Minister Arun Jaitley on Monday proposed to expand the pool of cess revenue with his new Krishi Kalyan Cess at 0.5 percent on all taxable services and also an infrastructure cess of one percent.
In his budget for 2016-17, Jaitley gave away around Rs.1,060 crore as direct tax reliefs while reaping a rich harvest of around Rs.20,670 crore as fresh/additional revenue under the head of indirect taxes.
He said the Krishi Kalyan Cess that will come into force from June 1, 2016 will be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers.
Tax credit of this cess will be available for payment of this cess.
Referring to the pollution levels in the Indian cities, Jaitley also proposed to levy one percent infrastructure cess on small petrol, LPG, and CNG cars, 2.5 percent on diesel cars of certain capacity and four percent on higher engine capacity vehicles and sports utility vehicles (SUV).
Renaming the Clean Energy Cess as Clean Environment Cess, he proposed to increase the rate from Rs.200 per ton to Rs.400 per ton.
He also hiked up the excise duty on various tobacco products by five percent to 15 percent barring beedi.
On the other hand as if to encourage horseracing, the threshold limit for tax deducted at source (TDS) for winnings from horse race has been increased to Rs.10,000.
Jaitley also brought readymade garments priced over Rs.1,000 under the excise duty fold while increasing the excise and customs duty on several other items.
He also said the assignment of radio frequency spectrum will be subject to service tax.
On the other hand Jaitley has proposed to reduce the excise duty on components needed to make centrifugal pumps to six percent from the current 12.5 percent.
Similarly the customs and excise duty on refrigerated containers have been reduced.
Referring to his last year’s proposal to reduced the corporate income tax to 25 percent from 30 percent over a four year period, Jaitley said new manufacturing companies incorporated on or after March 1, 2016 will be given the option to be taxed at 25 percent plus surcharge and cess.
However they should not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
“I also propose to lower the corporate income tax rate for the next financial year of relatively small enterprises i.e companies with turnover not exceeding Rs.5 crore (in the financial year ending March 2015), to 29 percent plus surcharge and cess,” he added.